Ornge probe: Government oversight of air ambulance service woefully inadequate, auditor-general finds

The Ontario government’s arrangement with air ambulance provider Ornge was so powerfully unsound that $700-million in public funds flowed through the service with essentially no oversight.

As a result, untold millions became entangled in questionable business deals and a mysterious web of subsidiary companies, says a scathing report released Wednesday by Auditor-General Jim McCarter.

“The ministry didn’t do its job in making sure that taxpayer interests were protected,” Mr. McCarter told a news conference at Queen’s Park, noting Ornge erected a bevy of obstacles when both his office and the ministry attempted to intervene.

“It was a very complex corporate structure, and Ornge certainly was resistant to our efforts to try to understand that corporate structure and where the money was flowing,” he said. “It was like pulling teeth… Every time we turned a corner a red flag was being raised.”

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There are still gaps in the report, Mr. McCarter added, because Ornge refused to grant access to relevant records held by some of the companies it created.

Still, the findings are stark. Despite funding Ornge to the tune of about $700-million since 2006, the province failed to obtain necessary data on the cost and quality of patient transports, the report found. And while annual funding for the air ambulance service rose by 20% during that period, the number of patients transported by air fell by 6%.

Ornge received additional funding to create a land ambulance service to transport a projected 20,000 patients each year starting in 2008, Mr. McCarter said, but it ultimately transported just 15% of that number — and the per-patient cost was nearly as high as for air transfers. Ornge also borrowed close to $300-million to finance the purchase of a new head office and 22 new aircraft, while an internal analysis showed only 15 aircraft were needed. The government may now be on the hook to repay that debt.

“There was a number of questionable business transactions that should have been questioned much earlier,” Mr. McCarter said.

The report reveals alarming details about Ornge’s non-profit and for-profit spinoffs, one of which bought a $15-million head office building and leased it back to Ornge at a rate 40% higher than fair-market rent. In another case, a for-profit subsidiary received a multimillion-dollar payout from a European helicopter manufacturer that sold Ornge its fleet.

Facing opposition calls to resign, Health Minister Deb Matthews remained unbowed Wednesday, foisting most of the blame onto former Ornge executives. Dr. Chris Mazza, Ornge’s former president, was replaced this year after the public learned he was collecting a $1.4-million salary while the service struggled with understaffing and delays.

“I want the front-line staff to know that they are my heroes. Unfortunately the same cannot be said of Ornge’s former leadership,” Ms. Matthews said. “The auditor’s report lays bare the shameful, inexcusable activities undertaken by the former leadership.”

Ms. Matthews said her ministry was effectively handcuffed by Ornge’s old performance agreement, signed during the tenure of former health minister George Smitherman. With respect to Ornge’s subsidiary companies, “we had no authority to stop them from setting them up and we had no authority to have any oversight over those companies.”

Ornge has already taken action to restore public trust, including a new performance agreement and a gradual shutdown of its subsidiary network, Ms. Matthews said. She committed to implementing all the auditor-general’s recommendations, from better performance indicators to periodic unannounced service reviews. Proposed new legislation would also allow the government to “take control” of Ornge in extraordinary circumstances by appointing a supervisor.

“They did their job so badly in this instance that the auditor-general couldn’t even do his job effectively,” Ms. Horwath said. “I believe that we’ve only really seen the tip of the iceberg when it comes to what happened at Ornge, but that should be enough to sink this minister once and for all.”

A day earlier, the New Democrats and the Progressive Conservatives united in the legislature to call for a select committee to investigate Ornge, even as Ontario Provincial Police continue a criminal probe.

Tory MPP Frank Klees said the public has lost confidence in the Health Ministry.

“If in fact the minister was incapable of managing this one small component of her multibillion-dollar ministry,” Mr. Klees said, “the question that we have to ask is: How many other Ornges are there?”

Government funding for the Ornge air ambulance service rose by more than 20% since 2006, while patient air transports decreased by 6%

Ornge received $65-million for inter-facility land ambulance transfers, projected to number 20,000 annually, but is only providing about 15% of that number

The Health Ministry failed to obtain sufficient information about a network of subsidiaries involved in Ornge’s finances, and so could not determine whether potential conflicts of interest were avoided

An Ornge subsidiary bought a $15-million head office building and leased it back to Ornge at 40% above fair-market rent

Ornge purchased seven more new aircraft than it needed, telling the ministry the excess capacity could be made available to its other business ventures

After buying 12 new helicopters for US$148-million, Ornge arranged to install seating for 12 people in two of them, meaning they could not be used to transport patients; Ornge said it was considering selling these

After Ornge purchased its new helicopter fleet, the European manufacturer agreed to donate US$2.9-million to Ornge’s charitable foundation; $500,000 was spent on two custom-made promotional motorcycle

The European manufacturer also paid millions to one of Ornge’s for-profit companies for unspecified marketing services

Ornge spent $28-million on a fleet of used helicopters as it awaited delivery of the new ones; it was expected to recoup only about $8-million in disposing of these aircraft

The Health Ministry is funding financing payments after Ornge borrowed almost $300-million for new aircraft and an office building

Ornge’s dispatch system does not automatically record the times of key events in the dispatch and patient-transfer process, making it difficult to assess the service’s success in meeting performance standards